Zambia Zambia at a Glance: 2005-06
Country Report Zambia Zambia at a glance: 2005-06 OVERVIEW Before the president, Levy Mwanawasa, and the ruling Movement for Multiparty Democracy (MMD) can contest the presidential and legislative elections set for 2006, they must deal with accusations from the former vice- president, Nevers Mumba, that Mr Mwanawasa has engaged in corrupt practises. Mr Mwanawasa and his supporters are likely to remove the threat posed by Mr Mumba by engineering his expulsion from the MMD. However, the episode is likely to further divide the MMD and increase its unpopularity with the public. On balance, the Economist Intelligence Unit expects both Mr Mwanawasa and the MMD to be re-elected in 2006, owing to their position as incumbents, the strong support of rural voters and the disunity of the opposition. We expect the government to remain broadly on track with its agreed economic reforms, although it could slip in the run-up to the 2006 polls, which would strain, but not break, relations with the IMF and other donors. Increased copper production will boost economic growth, but this expansion will be tempered by poor agricultural performance, and so real GDP growth will be below potential, at 5.6% in 2005 and 6.4% in 2006. Drought has hit much of Zambia this year, adversely affecting agricultural output and putting upward pressure on inflation, which is forecast to average 20% in 2005. Even assuming normal weather conditions in 2006, lax fiscal policy and the ongoing depreciation of the kwacha mean that inflation is forecast to stay high, at 19%. Key changes from last month Political outlook • There has been no change to our political outlook.
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